Regulate Me! Credit card edition 

Back in June, President Obama did some bragging about how tough he was being on the special interests:

When I ran for president, I did so because I believed that, despite the power of the status quo and the influence of special interests, it was possible for us to bring change to Washington. And the progress we've made these past five months has only reinforced my faith in this belief.

Despite the influence of the credit card industry, we passed a law to protect consumers from unfair rate hikes and abusive fees....

Of course, he was being a bit imprecise. The businesses who set interest rates and fees, and who collect those payments are not Visa and Mastercard, but banks. Today, the Federal Reserve issued the regulations to implement the credit card law, and who was applauding? The very banks Obama claims his rule was targeting.

From the American Bankers Association, which spent $6.9 million on lobbying in the first nine months of last year:


WASHINGTON – The Federal Reserve today released sweeping new rules to empower consumers as part of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009.

“These rules – the most comprehensive ever seen – herald a new era for America’s credit card customers,” said Kenneth J. Clayton, Senior Vice President and General Counsel for ABA Card Policy  “Many practices that frustrated customers have been eliminated, and credit card users will now benefit from greater control and clearer terms for their accounts.”

This is the most important step in an ongoing process that will increase protections and make card terms more predictable and manageable for customers....

These new CARD Act provisions build upon the protections that took effect in August 2009 and establish a firm foundation that will allow consumers to better understand and use their credit cards. Later this year, in July and then again in August, that foundation will be strengthened further when the rules to improve customer disclosures and provide other consumer protections are implemented. 

“This February’s improvements mark the most important step in the comprehensive reform of the credit card industry,” said Clayton.  “They put consumers squarely in the driver’s seat by restricting fees and requiring clearer rules and improved disclosures. The bottom line is this: the credit card industry is changing and these new rules will help empower consumers to take control of their personal finances.” 

If this dynamic -- big business applauding regulations Obama touts as blows to the special interests -- sounds familiar, it's because we've seen it in tax-prep, tobacco, toys, food, and employer-based health-care, among others.

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Timothy P. Carney

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